Italy 'very important' to European Union, says Juncker

As Italy moves closer to the formation of a government between the anti-establishment 5-Star Movement (M5S) and Lega (League), a leak to Huffington Post of a 40-page policy contract between the two Eurosceptic parties that details their roadmap rattled global markets on Wednesday.

While in Rome the leaders of the Five-Star Movement (M5S) and the League are taking more time to form a government, the European Union is in a state of uncertainty - waiting for the impact of a eurosceptic leadership in its fourth-largest member.

The comments are taking a page out of U.S. President Donald Trump's book and rallying cry "America First".

"We'll need to cope together with the European challenges as we do with other EU leaders, not all of them are flawless", one of the EU officials said.

Luigi Di Maio, the M5S leader, and Roberto Salvini, the League's leader, have agreed so far to abolish a pension reform and lower the age of retirement. Italian newspapers said that Di Maio was seeking the premiership for himself.

The opposition Democrats have warned that the League's vow to drastically lower taxes to a flat 15-percent rate and the 5-Stars' promise of subsidies to the poor will drastically drive up government borrowing. While the two parties specified they had removed the section on possibly opting out of the euro, they made no mention about the suggestion the European Central Bank should write off this debt.

Asian shares held steady on Thursday (May 17), while the euro struggled near five-month lows set a day earlier following a report that Italian populist parties trying to form a coalition could ask the European Central Bank to forgive 250 billion euros of debt.

But this week may go down as the moment when Mr Salvini and Mr Di Maio solidified their alliance on a platform - and tone - of conflict and defiance towards Brussels.

Italy's debt mountain is €2.3bn, or 132% of GDP, the highest ratio anywhere in Europe apart from Greece. This would lower Italy's public debt, now at 130% of national output.

Pressure on Mexico's peso returned as hopes for a new-look NAFTA trade deal with the US and Canada were pushed back and as the country's central bank said its systems had been hit by a 300 million pesos ($15.33 million) cyber attack.

"From Europe we have the umpteenth unacceptable interference by unelected officials", League leader Matteo Salvini said on Tuesday. Di Maio promised dialogue with the European Union, but warned that "we won't be subordinates to some Eurocrats".

"It's very possible that the parties will have to moderate their plans on a lot of these controversial areas once they try to govern", said Flavio Chiapponi, a political scientist at the University of Pavia and author of a book about the 5-Star Movement. But both said they haven't gotten to that point yet. Di Maio and Salvini have yet to say who will be prime minister.

In a meeting with Mattarella on Monday, 5-Star proposed little-known law professor Giuseppe Conte, but the League has not yet given its go-ahead, a source in the president's office said.